Bank levying attorney's fees after settling home loan

AlexFl

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Hi all,

I've never been in arrears on my home loan. When I enquired about settling my home loan, closing the home loan account and retrieving the original deed I was advised that the bank would levy R3k to R5k of legal fees before I could take the deed.

Has anybody here experienced this? Does anybody know what this could be about?

Thanks.
 

Venomous

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Its like doing change of ownership for your car once its paid up. Before then it belongs to the bank.

With property a lawyer has to do that with the deeds office...
 

AlexFl

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Thanks for the responses. They raise another question (if you'll humour me...):

If I'm about to put the place on the market (I realise we're not currently in a seller's market and it could take time to sell), the buyer and/or seller (?) will incur the same fee again. Given this, is there a way for me to mitigate this R3k to R5k legal fee now?
 

Kosmik

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Thanks for the responses. They raise another question (if you'll humour me...):

If I'm about to put the place on the market (I realise we're not currently in a seller's market and it could take time to sell), the buyer and/or seller (?) will incur the same fee again. Given this, is there a way for me to mitigate this R3k to R5k legal fee now?
Differant fees but if I recall correctly, the new owner would be responsible for those, not the seller.
 

Cius

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The fee is to register the change of status at the deeds office. Also just paid about R3800 to settle my bond and get the title deed. The price varies from 3K to 8K depending on the complexity of the bond registered. For instance if you have extended your bond multiple times it adds to the cost of unwinding it all.

So yes, it is normal, and the lawyers do actually do some work for their fee. However I suspect at an hourly rate none of us would mind earning.
 

Arthur

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Its like doing change of ownership for your car once its paid up. Before then it belongs to the bank.

With property a lawyer has to do that with the deeds office...
Wrong. The property never belongs to the bank.

The bank has a mortgage bond registered over the property. That is basically a contract between you the owner and moneylender that the moneylender can foreclose if you don't pay as agreed.

The bond is registered with the registrar of titles and deeds and by law that can only be done by a registered conveyancer. The fee is fixed by the Registrar, not by the bank or lawyers.
 

Cius

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Wrong. The property never belongs to the bank.

The bank has a mortgage bond registered over the property. That is basically a contract between you the owner and moneylender that the moneylender can foreclose if you don't pay as agreed.

The bond is registered with the registrar of titles and deeds and by law that can only be done by a registered conveyancer. The fee is fixed by the Registrar, not by the bank or lawyers.
Yep, its complex, but the salient facts are while you are the "owner" and have rights on occupancy, building on the property, sub letting, selling, etc, at the deeds office the property is registered in your name (for tax purposes) but the bank is also registered as an interested party in the fact that they borrowed you the money to pay for the house and should you default on that loan the property would then be sold to repay the loan. So its yours, but only "If" you never default on the loan. As correctly stated though the bank is never the owner of the property, however the property is registered collateral to the loan, so the bank has the right to sell your property if you default. That is just how collateral works.

You only get the title deed once you have fully settled the loan, and paid a lawyer to change things up at the deeds office to say you are now the full owner and there is no longer a bond against the property. At all points though most rights of ownership rest with you, not the bank. They just protect their financial interests by having this very formal collateral agreement that the government assists to enforce via the deeds office, courts, and sheriff of the courts.
 

rietrot

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The fee is to cancel the bond. It needs to be done be an attorney. It has nothing to do with ownership or the tittle deed. The bond is a separate document.

If you don't want to pay it some of the banks have an option to keep the account paid up but not cancel the bond. That might even help you if you need more money ib the future.
 

Arthur

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You only get the title deed once you have fully settled the loan
Only if you agree to to let them keep the title deeds for you - that's a private matter between you and the bondholder. Other than my first bond, I've always had the title deeds in my possession even when bonded.
 

Cius

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Only if you agree to to let them keep the title deeds for you - that's a private matter between you and the bondholder. Other than my first bond, I've always had the title deeds in my possession even when bonded.
Interesting, did not know that. Thanks for sharing!
 

Arthur

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Interesting, did not know that. Thanks for sharing!
Many financial institutions write that into their loan contract. If you don't like it, scrap the provision in the contract before you sign.
 

Cius

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Well, I did not mind them keeping it in all honestly. Getting it was kind of rewarding after working hard to clear my bond. Felt like the formal handing over type thing!
 

Arthur

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Well, I did not mind them keeping it in all honestly. Getting it was kind of rewarding after working hard to clear my bond. Felt like the formal handing over type thing!
Cool. As long as people realise the loan agreement and these sorts of provisions are a matter of private contract. As above and many other places on MyBB, there seems to be a widespread misperception that the bank owns a bonded property. It's yours. You may sell or improve it at any time, as you wish. You have a separate agreement with the lender that they will be paid as agreed in the loan agreement, and that loan is secured by way of a lien lodged with the Registrar.
 
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rietrot

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Many financial institutions write that into their loan contract. If you don't like it, scrap the provision in the contract before you sign.
The average person is going to have a hard time doing that and finding someone inside the bank with a mandate to negotiate on the standard terms and conditions of the loan.

The bank needs to agree before you scrap a provision.
 

Arthur

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The average person is going to have a hard time doing that and finding someone inside the bank with a mandate to negotiate on the standard terms and conditions of the loan.

The bank needs to agree before you scrap a provision.
Sure the other party must agree. I suspect, though, that most bond dept workers know that this provision about who keeps the title deeds is within their scope of agreement and that it is not a materially significant provision and that they are empowered by management to accept that particular deletion. Commercial terms are another matter, of course.
 
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